Boston Scientific announces interest rate step up for 5½%, 6¼% notes on acquisition

By Jennifer Chiou

New York, Dec. 5 - Boston Scientific Corp. said it will supplement the terms of its $400 million 5½% senior notes due Nov. 15, 2015 and $350 million 6¼% senior notes due Nov. 15, 2035 to increase the coupon if its ratings change due to its proposed acquisition of Guidant Corp.

The notes are currently rated A3 by Moody's Investors Service, A by Standard and Poor's and A by Fitch Ratings.

If the notes' ratings are cut to BBB+, Baa1 or BBB+, the interest rate will step up 25 basis points. If the notes go to BBB, Baa2 or BBB, the addition will be 50 basis points. If the notes are rated BBB-, Baa3 or BBB-, holders will receive an extra 75 basis points. And if the notes fall to BB+, Ba1, BB+ or below, the interest rate adjustment will be 100 basis points. The lowest rating will determine the change.

Subsequent rating improvements will result in a decrease in the adjusted interest rate, the company added.

If the Guidant acquisition closes, Boston Scientific said it will enter into a supplemental indenture with trustee J.P. Morgan Trust Co. NA.

If the Guidant acquisition does not occur, the interest rate adjustment will not take effect, the company said.

Based in Natick, Mass., Boston Scientific develops medical devices.

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